By Luisa Maria Jacinta C. Jocson, Reporter
HEADLINE INFLATION seemingly quickened in October amid greater costs of key commodities like meals and gas, analysts mentioned.
A BusinessWorld ballot of 11 analysts yielded a median estimate of two.4% for the buyer value index (CPI) in October.
The Bangko Sentral ng Pilipinas gave a 2-2.8% inflation forecast for the month.
“Greater costs of meals commodities equivalent to greens, fruits, and fish in addition to the rise in costs of home petroleum merchandise and the peso depreciation are the first sources of upward value pressures for the month,” the BSP mentioned in a press release.
If realized, October inflation would have accelerated from the 1.9% print in September. Nonetheless, it might nonetheless be slower than the 4.9% in the identical month a yr in the past.
“Estimated October inflation is 2.4% yr on yr. Potential drivers embrace greater petroleum costs, decrease electrical energy charges, reasonable meals inflation, and peso depreciation,” Safety Financial institution Vice-President and Analysis Division Head Angelo B. Taningco mentioned.
Financial institution of the Philippine Islands Lead Economist Emilio S. Neri, Jr. mentioned that unfavorable climate situations seemingly precipitated a spike in costs of meals gadgets, notably greens and fruits.
Agricultural harm as a consequence of Extreme Tropical Storm Kristine amounted to P3.76 billion, the most recent bulletin from the Agriculture division confirmed.
Chinabank Analysis famous the potential pickup in meals inflation. “Greater costs of greens fruits, fish, and eggs offset month-on-month declines within the costs of rice and meat.”
“Greater gas costs for October additionally contributed together with the uptick of costs in numerous meals gadgets,” Ruben Carlo O. Asuncion, chief economist at Union Financial institution of the Philippines, Inc., mentioned.
In October alone, pump value changes stood at a internet enhance of P2.80 per liter for gasoline, P4.60 per liter for diesel, and P3.25 per liter for kerosene.
Rizal Business Banking Corp. Chief Economist Michael L. Ricafort additionally famous the weaker peso trade charge, which “may result in some enhance in importation prices and total inflation.”
The peso closed at P58.10 per greenback at end-October, depreciating by P2.07 from its P56.030 finish at end-September.
Then again, the central financial institution mentioned inflation could be offset by decrease costs of rice and meat, in addition to the discount in electrical energy charges.
Manila Electrical Co. (Meralco) lowered the general charge by P0.3587 per kilowatt-hour (kWh) to P11.4295 per kWh in October from P11.7882 per kWh a month prior.
For residential clients consuming 200 kWh, this translated to a lower of round P72 of their complete electrical energy payments for the month.
Rice costs have additionally been on the decline after the manager order slashing tariffs on rice imports to fifteen% took impact in July.
The newest knowledge from the Agriculture division confirmed the common value of well-milled rice ranged from P43 to P54 per kilogram at end-October, decrease than the P47-to-P55 vary at end-September.
In the meantime, common milled rice value P40-P50 per kilogram from P45-P50 per kilogram a month in the past.
DOWNTREND TO CONTINUE
For the approaching months, analysts mentioned that inflation would proceed to settle throughout the BSP’s 2-4% goal band.
“Inflation may nonetheless stay on the 2% ranges for the remainder of 2024, although some seasonal pickup in costs are anticipated in the direction of the Christmas vacation season amid elevated demand, however solely to finally ease upon crossing the vacation season,” Mr. Ricafort mentioned.
Mr. Neri mentioned inflation ought to stay “manageable” within the subsequent 12 months, barring any shocks.
“Upside dangers to this outlook embrace the potential of La Niña and unfold of African Swine Fever,” he mentioned.
“It must also be famous that inflation stays delicate to local weather situations and will go up simply. Nonetheless, secure commodity costs amid China’s financial slowdown could offset these dangers.”
Expectations of within-target inflation would enable the BSP to proceed its easing cycle, Mr. Ricafort mentioned.
“For financial coverage, I feel it’s on autopilot and I see little or no elements to interrupt a 25-bp reduce in December,” Patrick M. Ella, economist at Solar Life Funding Administration and Belief Corp. mentioned.
BSP Governor Eli M. Remolona, Jr. earlier signaled a potential 25-bp reduce on the Financial Board’s Dec. 19 assembly, its final for the yr.
The central financial institution has to date lowered borrowing prices by a complete of fifty bps because it started its easing cycle in August.
“Moreover, succeeding month-to-month inflation figures this quarter will seemingly keep under 3% as a consequence of decrease rice tariffs and base effects,” Chinabank Analysis mentioned.
Sarah Tan, an economist from Moody’s Analytics, mentioned that regardless of the anticipated reacceleration, within-target inflation will “reaffirm BSP’s view that inflation expectations are well-anchored.”
“Whereas it will give BSP the arrogance to ship one other 25-bp charge reduce in December, however a weakening peso may immediate them to carry off the loosening,” she added.
With inflation anticipated to stay manageable, Mr. Neri mentioned a charge reduce from the BSP might be on the desk in December. He cited dangers that might derail the BSP’s rate-cutting cycle, equivalent to additional peso weak spot and uncertainty within the US Federal Reserve’s personal easing path.
“A stronger-than-expected US jobs report or a Republican sweep within the upcoming US elections may reinforce this sentiment, doubtlessly weakening the peso additional and including upward stress on inflation. The BSP could contemplate a pause in its charge cuts if the Fed doesn’t reduce as anticipated,” Mr. Neri mentioned.
“The current volatility within the markets highlights the necessity for prudence with regards to charge cuts. Whereas inflation forecasts enable room for a reduce, aggressive motion is probably not prudent within the present local weather.”
The BSP has mentioned that it’s going to “proceed to take a measured method in making certain value stability conducive to balanced and sustainable progress of the financial system and employment.”
